The periosteum plays a critical role in cortical bone expansion and homeostasis, has regenerative capabilities and responds to anabolic drugs. However, in spite of its clinical significance our basic understanding of periosteal cellular characteristics, local or paracrine regulatory factors as well as the specific mechanisms by which anabolic drugs regulate it, remain elusive. Thanks to powerful new sequencing technologies, a periosteal population of cells labeled by Cathepsin K (Ctsk+), which includes bona fide periosteal stem cells (PSCs) and non-stem periosteal progenitor (PP1 and PP2) cells has been recently identified in the long bones and calvarium, providing a great opportunity for studying the regulation and physiological relevance of the periosteum in skeletal phenotypes. In this context, our recent studies have established that loss of function mutations of the Wnt inhibitor SFRP4 lead to Pyle?s disease, a rare skeletal disease characterized by limb deformity and fragility fractures. Using the Sfrp4-/- mouse model we uncovered that Sfrp4 contributes to cortical bone expansion and homeostasis by regulating endosteal remodeling and periosteal formation. The studies proposed here are focused on the biology of the periosteal surface. Our objective is to identify the role of Sfrp4-mediated signaling in regulating its activity. We have found that Sfrp4+ cells in the periosteum constitute a specific pool of Ctsk+ ?periosteal? progenitors (PP1 and PP2) and that Sfrp4 deletion alters the % of PSCs and PP2 cells. The goal of the studies proposed in Aim 1 is to address whether Sfrp4 regulates the expansion, differentiation and/or function of periosteal stem cells and progenitors and the mechanisms by which this occurs. Given that PTH is a potent stimulator of periosteal bone formation, the findings that PSCs, bona fide stem cells, express the PTH receptor together with the findings that PTH positively regulates Sfrp4 in the periosteum are of significance and may have clinical consequences for the treatment of Pyle?s disease patients. The goal of the studies proposed in Aim 2 is therefore to explore whether Sfrp4-Wnt mediated signaling cooperate with PTH to regulate periosteal formation. Compelling evidences have demonstrated that stem cells in the calvarium suture and periosteum serve as growth centers for bone formation during development and support bone repair in response to injury. In the calvarium PSCs are mainly within the suture, while PP2 cells are predominant in the calvarial periosteum outside of the suture and PP1 are found at both sites. Despite canonical and non-canonical Wnt signaling activation, the absence of Sfrp4 results in lack of new bone formation in response to injury. The goal of the studies proposed in Aim 3 is to explore the mechanism(s) by which Sfrp4+ cells contribute to the bone regenerative potential of stem cells/progenitors using calvarial defects as injury repair model. Analysis of signaling pathways regulating periosteal stem cells and progenitors may open novel and specific therapeutic options for human diseases associated with bone fragility and impaired bone healing and bone regeneration.